MUMBAI: The second largest pure-play gold loan player Manappuram Finance has inked a deal with Bain Capital for an equity infusion of Rs 4,385 crore for an 18% equity transfer. The deal also leads to an open offer by the private equity major for an additional 26% reducing the promoters' -- VP Nandakumar and family -- stake to below 30%.
Following the fund infusion of Rs 4,385 crore under which the private equity major will acquire shares and warrants worth 18% of the company, the investor will be classified as a joint promoter with board representation, the Thrissur, Kerala-based Manappuram with a loan book of over Rs Rs 44,210 crore said in an exchange filing Thursday evening.
The stake will be purchased by Bain Capital Asia (through its affiliated BC Asia Investments XXV and BC Asia Investments XIV) through a preferential allotment of shares following which Bain will get the right to appoint a member on the board, giving it joint control of the gold loan company, the companies said in a joint statement.
“The equity transfer will be on a fully diluted basis via preferential allotment of equity and warrants at a price of Rs 236/share, --a 30% premium over the six-month average trading price. The transaction will trigger a mandatory open offer for the purchase of an additional 26% stake on an expanded capital basis but excluding warrants. The open offer price has been fixed at Rs 236/share,” the companies said in a joint statement.
Based on the open offer subscription, Bain’s stake will vary between 18% and 41.7% on a fully diluted basis, including shares to be issued pursuant to exercise of warrants. Existing promoters will hold a 28.9% stake in the company post the investment on a fully diluted basis, including shares to be issued pursuant to exercise of warrants.
The investment aims to fuel the 75-year-old Manappuram’s next phase of growth and drive transformation by enhancing operational excellence, strengthening leadership, and expanding its presence across key segments, Bain said in the statement.
The deal will trigger an open offer for additional 26% stake in Manappuram at a price of Rs 236/share, leading to Bain holing 44% in the company promoted by P Nandakumar and his family. The existing promoters will hold 28.9% stake in the company after the deal.
Meanwhile, Manappuram which has a track record of 75 years, also said its subsidiary, Asirvad Microfinance, which was under some regulatory action earlier and whose IPO papers are pending with the Sebi since October 2023 will be now be withdrawn. The company further said the microfinance company will make the necessary application to Sebi in this regard.
Founded in 1949, Manappuram Finance is the second largest financier in the gold loan segment serving over 6.6 million customers through its 5,357 branches across 28 states. It employs 50,800, Nandakumar, the managing director of Manappuram, said.
Manappuram, founded in 1949 in Valapad, Kerala, has developed a robust, diversified platform, and we look forward to providing the necessary capital, strategic resources, and operational expertise to help the company accelerate its growth and continue to lead in the industry, said Pavninder Singh, a partner at Bain Capital.
Bain remains invested in Axis Bank, 360One Wealth & Asset Management, L&T Finance, and Lionbridge Capital among others. Globally it manages $185 billion worth of assets.